IHS: Autonomous Vehicles to Take Off Faster Than Originally Expected

More and more experts are turning bullish on autonomous vehicles. In what has been seen as a distant prospect, wide-scale deployment of autonomous cars is closer than most originally thought.

More and more experts are turning bullish on autonomous vehicles. In what has been seen as a distant prospect, wide-scale deployment of autonomous cars is closer than most originally thought.

IHS Automotive now sees some 21 million autonomous vehicles sold by 2035, a “substantial” increase from the consultancy’s previous forecast. Global sales should hit 600,000 by 2025, but then take off in the following decade, growing by a 43 percent annual compound growth rate. A host of factors is behind this surge. The proliferation of car-sharing and ride-sharing services is one key component, while increased investment from suppliers and technology companies, along with more activity from research and development centers, will also help accelerate the transition.

Jeremy Carlson, principal analyst at IHS Automotive, told The Fuse: “Increased activity from the automotive and technology industries, mobility trends in urban areas, and positive signs from regulators are speeding up the process. A lot of resources are going into autonomous vehicles.”

U.S. to lead

Different markets will see different penetration levels amid contrasts in vehicle ownership preferences, the pace of acceleration of shared mobility, regulatory impact, and technological advances.

IHS expects the U.S. to be the first market to deploy autonomous vehicles on a large scale, with the number of units reaching several thousand by the end of this decade.

IHS expects the U.S. to be the first market to deploy autonomous vehicles on a large scale, with the number of units reaching several thousand by the end of this decade. However, while the U.S. will see the strongest pace of growth at the beginning of deployment, China will ultimately have more units in the outer years of the forecast. For instance, IHS pegs the number for China at 5.7 million units sold by 2035, versus 4.5 million in the U.S. “The sheer volume of vehicles expected to be sold there as well as consumer demand for new technologies will drive growth, with more upside possible as regulators assess the potential of autonomous mobility to address safety and environmental concerns,” IHS said in a statement.

Western Europe, according to IHS, will also see significant penetration, with the number of units reaching 3 million in the next two decades. Eastern Europe and the Middle East North Africa region won’t see the same type of numbers but have a lot of upside potential based on new business models and use cases. Meanwhile, Japan and South Korea combined will see more than 1 million units sold through 2035 driven by demographics, an “affinity” for technology, and the motivation of Japanese carmakers to catch up with their peers in the U.S. and Europe.

Challenges to the forecast

While IHS has boosted its forecast for autonomous cars, there remains a number of hurdles.

“We don’t want to minimize the challenges, particularly on the regulatory side,” Carlson told The Fuse. “But we expect them to be addressed over time.”

“We don’t want to minimize the challenges, particularly on the regulatory side.”

Legal frameworks and regulatory issues are key impediments, while technology, though it’s becoming more sophisticated, still needs to be brought to market and scaled up. In the U.S., with tech companies and automakers clamoring to get ahead in the autonomous space, regulation remains the biggest obstacle. A patchwork of 50 different sets of regulations by each state is the nightmare scenario, which would cause uncertainty and confusion for investors and consumers. However, this situation may very well be avoided. Carlson notes that some policymakers and regulators have recognized the safety and environmental benefits of autonomous cars and these early adopters are generally in favor of streamlining regulations in order to make them conducive for wide deployment.

Quicker-than-expected penetration of autonomous vehicles would be good news on a number of fronts, given that they will significantly cut the number of traffic deaths, improve freedom of movement for millions, and hasten the electrification of the automobile fleet.

“The future fleets of driverless vehicles will provide mobility services for anyone and anything, creating exciting and new opportunities for the automotive industry,” Egil Juliussen, director of research at IHS Automotive, said in a statement.

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The Fuse is an energy news and analysis site supported by Securing America’s Future Energy. The views expressed here are those of individual contributors and do not necessarily represent the views of the organization.

Issues in Focus

Safety Standards for Crude-By-Rail Shipments

A series of accidents in North America in recent years have raised concerns regarding rail shipments of crude oil. Fatal accidents in Lynchburg, Virginia, Lac-Megantic, Quebec, Fayette County, West Virginia, and (most recently) Culbertson, Montana have prompted public outcry and regulatory scrutiny.

2014 saw an all-time record of 144 oil train incidents in the U.S.—up from just one in 2009—causing a total of more than $7 million in damage.

The spate of crude-by-rail accidents has emerged from the confluence of three factors. First is the massive increase in oil movements by rail, which has increased more than three-fold since 2010. Second is the inadequate safety features of DOT-111 cars, particularly those constructed prior to 2011, which account for roughly 70 percent of tank cars on U.S. railroads. Third is the high volatility of oil produced from the Bakken and other shale formations, which makes this crude more prone towards combustion.

Of these three, rail car safety standards is the factor over which regulators can exert the most control. After months of regulatory review, on May 1, 2015, the White House and the Department of Transportation unveiled the new safety standards. The announcement also coincided with new tank car standards in Canada—a critical move, since many crude by rail shipments cross the U.S.-Canadian border. In the words DOT, the new rule:

Since the rule was announced, Republicans in Congress sought to roll back the provision calling for an advanced breaking system, following concerns from the rail industry that such an upgrade would be unnecessary and could cost billions of dollars. The advanced braking systems are required to be in place by 2021.

Democrats in Congress have argued that the new rules are insufficient to mitigate the danger. Senator Maria Cantwell (D-WA) and Senator Tammy Baldwin (D-WI) both issued statements arguing that the rules were insufficient and the timelines for safety improvements were too long.

The current industry standard car, the CPC-1232, came into usage in October 2011. These cars have half inch thick shells (marginally thicker than the DOT-111 7/16 inch shells) and advanced valves that are more resilient in the event of an accident. However, these newer cars were involved in the derailments and explosions in Virginia and West Virginia within the past year, raising questions about the validity of replacing only the DOT-111s manufactured before 2011.

Before the rule was finalized, early reports indicated that the rule submitted to the White House by the Department of Transportation has proposed a two-stage phase-out of the current fleet of railcars, focusing first on the pre-2011 cars, then the current standard CPC-1232 cars. In the final rule, DOT mandated a more aggressive timeline for retrofitting the CPC-1232 cars, imposing a deadline of April 1, 2020 for non-jacketed cars.

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DataSpotlight

The recent oil production boom in the United States, while astounding, has created a misleading narrative that the United States is no longer dependent on oil imports. Reports of surging domestic production, calls for relaxation of the crude oil export ban, labels of “Saudi America,” and the recent collapse in oil prices have created a perception that the United States has more oil than it knows what to do with.

This view is misguided. While some forecasts project that the United States could become a self-sufficient oil producer within the next decade, this remains a distant prospect. According to the April 2015 Short Term Energy Outlook, total U.S. crude oil production averaged an estimated 9.3 million barrels per day in March, while total oil demand in the country is over 19 million barrels per day.

This graphic helps illustrate the regional variations in crude oil supply and demand. North America, Europe, and Asia all run significant production deficits, with the Middle East, Africa, Latin America, and Former Soviet Union are global engines of crude oil supply.